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Legal and Constitutional Affairs References Committee
01/11/2019
Impact of changes to service delivery models on the administration and running of Government programs

McLEOD, Dr Travers, Chief Executive Officer, Centre for Policy Development

RUNDLE, Dr Kristen, Co-Director, Centre for Comparative Constitutional Studies, Melbourne Law School, University of Melbourne

WARD, Mr Jason, Principal Analyst, Centre for International Corporate Tax Accountability and Research

Committee met at 09:34

Evidence from Dr McLeod was taken via teleconference—

CHAIR ( Senator Kim Carr ): I declare open this public hearing of the Senate Legal and Constitutional Affairs References Committee inquiry into the impact of changes to service delivery models on the administration and running of government programs. The committee's proceedings today will follow the program as circulated with a few minor amendments. We are going to truncate a few of the sessions. These proceedings are being broadcast live via the web and in Parliament House. I remind witnesses that, in giving evidence to the committee, they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee. The committee prefers evidence to be given in public. But, under the Senate's resolutions, witnesses have the right to request to be heard in confidence, which is described as being in camera. If you are a witness today and you intend to request to give evidence in camera, please bring this to the attention of the secretariat as soon as possible. If a witness subject to answering a question, the witness should state the grounds upon which the objection is taken and the committee will determine whether it will insist on an answer, having regard to the grounds claimed. If the committee determines to insist on an answer, the witness may request that the answer be given in camera. Such a request may of course be made at any time.

With those formalities over, I now welcome representatives from the Centre for Comparative Constitutional Studies, the Centre for International Corporate Tax Accountability and Research and the Centre for Policy Development. Thank you for taking the time to give evidence today. It is really appreciated when citizens go to the trouble of presenting to the Senate. Information about parliamentary privilege has been provided to you and it is available from the secretariat. The committee has also received your submissions, which it has numbered 3 and 27 respectively. The Centre for Policy Development has not made a submission. Do you wish to make any corrections to your submissions? If not, I invite each of the organisations to make a brief opening statement before we go to questions.

Dr McLeod : First of all, I would like to congratulate the committee for taking on this inquiry. The impact of changes to service delivery models on the effectiveness of government programs has long been of interest to the Centre for Policy Development. This is evidence in our reports such as False Economies from 2014, which considered the efficiency dividend; Grand Alibis, from 2015, which looked at the consequences of outsourcing for employment services; and Settling Better, from 2017, which considered how to build more effective employment and settlement services for humanitarian migrants to Australia. That work has led to a multi-user settlement initiative where we are working with government service providers, employers and refugees from all over Australia to help our most vulnerable new arrivals find jobs, start businesses and participate in their communities.

The CPD's work has featured prominently in the national review of employment services by Sandra McPhee, the final report of which was released last December. We made a number of related recommendations to Peter Shergold's review of settlement outcomes, the report of which is yet to be released, and to the Joint Committee of Public Account and Audit's inquiry last year into the use of consultants and contractors, on which a report was not released. Many of the recommendations that relate to this inquiry were also made by the CPD to the Thodey review into the future of the APS, which we are waiting for. Separately, the CPD has published research on attitudes to Australia's democracy and service delivery. Our chairperson, Terry Moran AC, a former secretary of the Department of the Prime Minister and Cabinet, spoke about much of this research in his oration this year in honour of the late Jim Carlton.

In this statement I would like to make two general observations about the importance of this inquiry for Australian democracy before making three specific recommendations. The first observation is that poor service delivery outcomes undermine trust in government and diminish our democracy. It would be remiss not to mention yesterday's interim report by the aged care royal commission, appropriately titled Neglect, which makes that clear. It described aged care services as 'out of sight and out of mind'. It described the aged care system as 'lacking fundamental transparency, in need of a reality check and unkind and uncaring to older vulnerable Australians'. It said this in the foreword:

The structure of the current system has been framed around the idea of a ‘market’ for aged care services where older people are described as ‘clients’ or ‘customers’ who are able to choose between competitively marketed services.

But many older people are not in a position to meaningfully negotiate prices, services or care standards with aged-care providers. The notion that most care is consumer directed is just not true. Despite appearances, despite rhetoric, there is little choice with aged care. It is a myth that aged care is an effective consumer driven market. The report also said that the regulatory regime appears to do little to encourage better practice beyond the minimum standard. We were flabbergasted to hear that, until recently, it was routine practice for large sections of the reports of accreditation audits of services conducted by the Aged Care Quality and Safety Commission to be generated by computer assisted text. In other words, the same positive words, prompted by computers, were used over and over again. Computers cannot determine quality; only people can, and should, do that.

A second observation is that Australians don't want government to clear the field in human services. They want government in the game. Our research over two years suggest that three-quarters of Australians think it's important for government to maintain the capability and skills to deliver human services directly. Fewer than one in 10 people think this is not important. What's more, Australians rate services delivered by government as more accessible, more affordable, of higher quality and easily more accountable than those delivered by private companies and even by charities.

I want to mention three recommendations that relate to this inquiry. The first is about approaches to service delivery and outsourcing generally. The second is the long-run impact on capability, public value and public memory. The third is about the average staffing level cap. On service delivery and outsourcing generally, the view we've maintained since 2015 and the report Grand Alibis is that the outsourcing pendulum has swung too far. In that report we asked if contracting out had improved the public sector's capability to address consistent disadvantage and meet complex needs. We found that a predisposition by recent governments to outsource human services risks poor outcomes for the most disadvantaged Australians and erodes public-sector capability to design and, where necessary, deliver effective services for our most vulnerable people.

We suggested that the experience with employment services was a crucial case and that this entirely outsourced system had blurred responsibility for service outcomes and led to the emergence of pernicious 'grand alibis' where no one organisation was held accountable for service problems or failures. These findings were reinforced in December last year by the McPhee review, which was released by the then Minister O'Dwyer. Here is a $6.5 billion system with poor outcomes, waiting times of more than five years for the most vulnerable, case loads of one to 148 and employer penetration of just four per cent. A primary focus on compliance has meant disadvantaged jobseekers—those with complex needs—stand little chance of success in the procurement based system.

We understand the complex, contested and emotional nature of this terrain in human services. We accept that there is no silver bullet or one-size-fits-all solution. We know that government's role is not monolithic. Different policy and service delivery challenges and processes require government to occupy different parts of the service delivery spectrum. But we have said consistently that some areas of human services are so fraught that the public role cannot simply be procurement and contract management. The chief recommendation in Grand Alibis, which we reiterate, is that any outsourcing needs to pass a net public interest test to examine, as appropriate, the financial, economic, social and administrative impact, including reputational risks, loss of capability and public accountability. On the long-run impact on public value and capability, we note that the Prime Minister spoke in August to the APS and asked for a step change on service delivery. He said that ensuring services are delivered seamlessly and efficiently is the key priority. We think this will only work if there is a greater investment in public capability to coordinate effective services in communities. Our community deals model—which has been trialled in Melbourne's west under the Regional Employment Trial—is a mission driven model to combine government, service provider, employer and private sector work towards common, public-value goals. Restoring public delivery capability, or benchmarking, we think, is a necessary step for this inquiry—the insistence on a public delivery option or benchmarking, so that departments and agencies can act as effective, persistent policy entrepreneurs.

The last recommendation is around the average staffing level cap. We note that the Department of Prime Minister and Cabinet's submission to the JCPAA inquiry last year and the Services Australia submission to this inquiry have both highlighted the limitations of that cap, and that agencies have frequently needed to engage external contractor and consultancy services to fill key roles. We think that there is clear evidence and consensus that this cap is corroding capability. I'll leave it there.

Dr Rundle : Thank you to the Senate committee for inviting us to speak before you today. As a representative of the Centre for Comparative Constitutional Studies at the University of Melbourne, we work in the areas of research, teaching and public engagement on questions pertaining to the Australian public law system—constitutional and administrative. Thank you for the opportunity to make this submission. We were motivated to do so because, when we saw the terms of reference for this committee's inquiry, we noted that they attended to a disparate range of potential models for government service delivery and their changes, and that the assumption behind those terms of reference was that this was a matter of going from the status quo to the next stage of development with respect to changes to those models of delivery. We were concerned to see this committee engage with the broader context in which those choices are made.

The key submission that we want to put forward is that choosing the models for government service delivery is not a merely technical exercise. It may be a responsibility of the executive government, but it is a responsibility that has a context and, specifically, a constitutional context. Briefly, the two main points we made in our written submission to your inquiry concerned two constitutional relationships that we think bear upon this committee's specific inquiry. The first is the relationship of the government's accountability to parliament through ministerial accountability to parliament, and the second is the government's relationship to the people of Australia from whom it draws its authority. We see both of these relationships as deeply implicated in the questions before this committee . Choosing how government delivers its services to citizens is a special kind of responsibility, because it stands to both arrange and rearrange the relationships between government and its people.

On the two specific relationships , we see this committee as a very critical parliamentary actor. We appreciate that the move towards privatisation, contracting out, and other techniques has been developed and consolidated over many years by governments of all stripes. We also see that executive governments, in wanting to implement these kinds of programs and developments to them, are unlikely to be motivated to draw larger questions to the attention of the parliament as to their constitutional context. But this committee is a parliamentary actor, and the upshot of our submission is that we urge this committee to be satisfied that, should there be changes along the lines proposed, ministers will be appropriately accountable to the parliament. There are many factors that complicate doctrines of responsible government. There are many factors that complicate the day-to-day life of ministerial accountability to parliament and the people. But those factors are exponentially made more complex when we introduce a range of private providers in those relationships, especially with respect to commercial-in-confidence and other elements of contracting that can operate to shield the private actors from the full extent of ministerial accountability to parliament. So we urge the committee to be satisfied in its investigations that there will be appropriate mechanisms of ministerial accountability in any measures presently taken or taken in the future, because ministerial accountability to parliament is the backbone of our constitutional system.

The second relationship is that between the government and the governed. It is, under our Constitution, a relationship of the equality of both before the law. We're concerned to ensure that citizens have the legal standing with respect to government in relation to government services delivery that is equal to them—that there are no barriers to accountability, including ministerial accountability, but other forms of accountability as well. We also note, which goes to the statement just made by the Centre for Policy Development, that we have seen, in recent times, some very worrying examples of a loss of intelligibility to the relationship between citizens and government, such as in the robo-debt situation and others. We also see this as fundamentally constitutional in character. The Constitution sets up a system for the government of people framed by the authority of the Constitution and the laws of the parliament. We have an expectation that the administration of those laws and programs, with respect to them, will be intelligible, fair and respectful to those who they affect.

Mr Ward : I'll try to keep my comments very brief. I want to reiterate that we've done a number of investigations—that was part of my submission—into major companies that have done government outsourcing, as well as looking at the aged-care sector and companies receiving substantial amounts of government funding to provide aged-care services. There is a really shocking and disturbing lack of public transparency and public accountability for those government fundings, and that's an ongoing concern. There are some mechanisms that have been established in order to not provide government funding to companies that are getting contracts to do government work or getting government funding for public services, but those are, so far, quite ineffective. There have been some international developments on that front, with other governments in the US and the UK beginning to look at those issues as well. I'm hoping to come back early next year and do a more thorough review of some of the largest companies receiving government funds. It's worth noting that part of your discussion this afternoon may be around the visa privatisation. The multinational companies involved in that have pretty atrocious records of tax avoidance, both in Australia and globally. That would be of major concern.

There is a step forward, as I mentioned, with regulation that went into effect this year to require companies with over $4 million worth of contracts with the federal government to have a clean bill of health from the Australian Taxation Office, but it's a fairly weak and ineffective measure. The principle is absolutely right and needs to be enforced, and that provision needs to be given some teeth so that we're not rewarding companies with aggressive tax avoidance in Australia with additional federal contracts. One recent example is that the largest federal contract given in 2019 was with Bupa, a company that has clearly failed. It received over half a billion dollars in providing aged-care services, had to reach a settlement with the ATO for $157 million and then, earlier this year, was rewarded with a $3.4 billion contract to provide medical services to the Australian Defence Forces. Companies like this shouldn't be rewarded with public dollars after demonstrating clearly aggressive tax behaviour in Australia and globally.

The current provision of that law looks only at the entity applying for the contract, not at the broader practices and behaviour of a bigger corporate structure, so it's really easy to play shell games and hide what's going on in the broader picture. One of the examples in the report that we did as a submission—not necessarily related to tax issues, which is my focus—was about Concentrix, a subsidiary of a US multinational, which was awarded a contract here. This same company—the same subsidiary section of the larger multinational company—was awarded a contract for distribution of public benefits in the UK. It created such a disaster that the government had to spend tens of millions of pounds cleaning up the mess left behind, and people literally died because of the company's inability to deliver benefits to the recipients that were intended to get benefits. Then the same company ends up getting a contract to do Centrelink services in Australia after a track record of disaster in the UK. So there needs to be a much more thorough vetting in terms of business practices, responsibility and tax payments in terms of companies getting federal contracts.

CHAIR: Thank you very much. Senator Green, would you like to start off the questions?

Senator GREEN: Thank you. You've actually answered a few of my initial questions in your opening statement, so I'm just going to go to a broader question to all of you, and I'm sure that there'll be a different response depending on your expertise. At the moment there's a quite public campaign around the public's right to know. I found it quite frustrating to be in Senate estimates in this room last week and to not be able to ask questions of the Great Barrier Reef Foundation, who's been awarded, I think, almost $443 million of public funding. I want to see if you could comment on the service delivery model, particularly around the proposed visa privatisation, and how that might affect the public's right to know through different ways we can keep the government accountable? How that will affect the implications going forward for the government's accountability with projects like that?

Mr Ward : I'll try to touch on some of those. I think one of the recommendations that we had was that any large contracts—unless there's a valid reason of national security or whatever—should be publicly available and accessible in a database. That's currently not the case. I think there's been a pretty clear demonstration in recent years that the freedom of information provisions are not really working, and it's very difficult to get information around public contracting. I think there are also concerns, particularly in terms of the service delivery model in the context of visa processing, around privacy and security of that information. Who's to say that those records won't be processed by a company using workers overseas? What's the security of that information? How do you control access to that information? I think those are all very serious and important issues. We don't know if they're dealt with in terms of contracts because we can't see what's in those contracts.

CHAIR: Dr Rundle?

Dr Rundle : Senator, I'm going to speak in more general terms to your question. The first point, I would say with respect to concerns about the right to know is a general one coming from my introductory comments, which is the need to distinguish here between techniques of government in a particular historical era and the character of the system in which government belongs, which is the character of our constitutional system which demands accountability of government to the people through the parliament. If I were to comment specifically on the environment in which rights to know might play out in these privatised contexts, I would speak first of all to that overarching point about the entire system depending on the accountability of government to the people through the parliament. But secondly to other frameworks of information that we have, such as freedom of information, where when the tension between transparency and what government needs in order to conduct its business—transparency and secrecy—has been resolved it has been around very carefully circumscribed exemptions in the Freedom of Information Act. The point of relevance here is those carefully circumscribed bases for refusal to give information were deliberated by parliament. They've been looked at again in amendments in the last 10 years, which means the rules of the game, so to speak, around what is known and what is not known have been a matter for parliament to determine. So to return to the fundamental contribution that the Centre for Comparative Constitutional Studies wants to make to this inquiry it goes to how much parliamentary activity will be, should be, implicated in the consolidation, expansion and development of the kinds of arrangements that are proposed and that are being considered. And within that parliamentary activity, how does the parliament propose to handle such questions as the rights of citizens to know what is going on?

CHAIR: Dr McLeod, did you want to add anything?

Dr McLeod : Senator, there are three brief points. In our 2015 report Grand alibis we called for the Australian National Audit Office to be able to review confidentiality clauses in outsourcing contracts before execution, because we had serious concerns around transparency. These were noted yesterday in the interim report of the aged-care royal commission. They noted the utter lack of transparency in the aged-care sector, despite the fact that 80 per cent of the funding of the sector comes directly from the government. And the point we want to make on the visa issue is just to note the submission by the Migration Council of Australia, where they said:

Evidence-based migration policy that is responsive to public priorities of nation-building, and satisfying economic requirements and humanitarian obligations, hinges both upon the continuous and active evaluation of program outcomes and strong service-delivery capability.

And for that, transparency is critical.

Senator GREEN: Dr Rundle, your submission states:

The use of tender processes … places a departmental wall between contractors and Ministers, which can be used to avoid Ministerial responsibility.

I think that goes to what you were saying there, but would you be able to explain, from a practical level, how that may play out, particularly in this visa privatisation process?

Dr Rundle : Certainly. Senator, I don't claim to be an expert on the tender processes, but the broader point we were trying to make there was that there were perfectly sound public policy reasons for ensuring that ministers were not directly involved in tender processes—so favouritism or other concerns—and that these tender processes would be conducted or run by departmental officers. The flipside of that insulation for sound reasons is that there is a potentially serious lack of knowledge by the minister of how the tender processes are working. We were concerned enough to highlight this by saying there was potentially a departmental wall, that an element of ministerial responsibility that is complex at the best of times is the responsibility of departmental officers to the parliament. But that is then given an extra layer of complication when the departmental officers are working with private entities, such as contractors, to determine what the government will ultimately do. There seems to be if not walls then certainly barriers to transparency, visibility and so forth that make meaningful sense of ministerial accountability, as opposed to theoretical sense of that institution.

Senator GREEN: Following on from that, Dr McLeod, in your opening statement I think you spoke about some of the delays in visa processing, so the amount of time it's taking to get visas processed. In terms of ministerial responsibility, if this service is moved onto a contractor, how will the government be held accountable for those delays?

Dr McLeod : Senator, I'm not sure that was in our opening statement, but we would refer back to what we have maintained for several years—that is, the need for it to pass a net public impact test. It may have been one of the other opening speakers who referred to the delays in processing times.

Senator GREEN: Okay. Mr Ward, you've done some case studies of some bigger contracts, particularly around the tax arrangements of those case studies. There's a lot that you've provided on paper so that's helpful for us. I just wondered if, in the short time that we have, you could make clear to us what the main issue is around these bigger, larger companies and how we're able to scrutinise their tax arrangements, if we are able to scrutinise their tax arrangements at all, and how that affects the delivery of those services and why that should matter to people on the ground getting the services.

Mr Ward : I think it should matter because, in order to have the revenue that we need to fund the services that we all want, we need the revenue and we need to make sure that everybody is paying what they should be paying in taxes. The level of government procurement is substantial and has the ability to set a broader standard across the market, and to raise the standards, not lower them. People getting money from federal spending should be held to a higher level of public accountability and public standards. To use the aged-care example, if you're getting money to care for Australia's elderly then that money should be going to that purpose, and should be going directly to that, not enriching investors before it's providing the care that's needed.

There is not a clear scrutiny and there has not been a clear scrutiny of the tax practices of contractors before. There is this new provision; it's relatively ineffective. It's easy for a company to get a clean bill of health from the tax office, because essentially they have to be not in an ongoing dispute. So a company that had settled a tax dispute for potentially hundreds of millions of dollars could get a contract because it had reached a settlement, even though it had a demonstrated practice and history of tax avoidance in Australia.

The other problem with the new provision is that it's essentially not looking at the whole of a company. Most multinationals have hundreds, if not thousands, of different subsidiaries and the one that's going through the tender process, trying to get a contract, can get a clean bill of health, whereas the six subsidiaries sitting next to it or the three sitting above it could have egregious tax records that aren't getting caught in this screening. There needs to be a much more comprehensive look both at tax issues and at performance issues for what they're getting the contract for. We need to make sure there's a clear vetting so that we're not giving contracts to companies that are (1) avoiding tax and (2) not capable of doing the work they're supposed to be doing under the terms of the contract.

CHAIR: I have a supplementary question to Senator Green's. The two companies, the consortia, that have been associated with a bid for the visa processing, so Australian Visa Processing and Australia Post Global IT and Accenture, have you looked at those particularly?

Mr Ward : I haven't done a detailed look at them, but I can tell you that those companies have an incredibly extensive global track record of tax avoidance and have an Australian track record of tax avoidance.

CHAIR: If you haven't looked at them in detail, would you be prepared to take on notice a question whereby you did have a look at them in terms of research advice you can provide to the committee?

Mr Ward : Absolutely.

CHAIR: Did you say you have one more?

Senator GREEN: That was my question, Senator Carr.

CHAIR: My apologies!

Senator GREEN: We got there!

Mr Ward : One of the recommendations that we have in this report, and in other reports, is that any company that gets over $10 million in federal contracts should file full financial statements with ASIC. I can tell you, for example, that Oracle has multiple subsidiaries in Australia and the top 3 don't file full financial statements. They use a loophole called 'special purpose filings'. This is a company getting hundreds of millions of dollars in federal contracts but not abiding by the full set of Australian accounting standards, so we don't have clear visibility into their Australian practices.

CHAIR: Thank you very much.

Senator STOKER: In relation to the matter that you just took on notice for Senator Carr, you said you hadn't looked into those entities, but that they had long track records of avoidance. I find those two statements jarring, so if you could provide the evidence that makes you say they have long track records that would be helpful. It's an interesting thing to say in circumstances where you haven't looked at them, so if you could provide that evidence, I would be grateful.

Full disclosure: Dr Rundle was one of my lecturers at university. It's nice to see you.

Dr Rundle : It's nice to see you.

Senator STOKER: It's been a while. I want to talk to you about the role of the Ombudsman in the constitutional arrangements and their role in ensuring accountability, both in traditional government service delivery and in circumstances where there is involvement of private sector actors.

Dr Rundle : That's a very interesting question. We have in our country a range of institutions that we have developed on the accountability landscape and that parliament has enacted to form certain roles. The Ombudsman has, potentially, a very important supervisory role with respect to all aspects of citizens' experience of government administration. There are various ways in which that can be triggered. It can be triggered by a complaint that leads to a concern that there might be a systemic problem, it can be triggered by own-motion investigations or there might be other legislative requirements that invest jurisdiction in entities like the Ombudsman or other inspectors to undertake those kinds of supervision. The role that the Ombudsman plays with this is very important, but of course there is nothing binding about an ombudsman's recommendations when they expose—for example, after the robo-debt debacle, there was an extensive Ombudsman report into that.

I would say the following: our constitutional structure places political accountability at its centre. It's the reason why there's resistance in Australia to all sorts of accountability that would involve the High Court, for example, being more closely involved in constitutional arrangements. Political accountability is the backbone of how our system works. Ministerial accountability is the exemplification of that. That comes first. Then there are other institutions that may assist with exposing problems between government and the governed, and with exploring exactly what is going on with them and making recommendations about how that might be addressed. Those institutions, though immensely important and having an interface to the citizens that politicians may not have, are still less in the hierarchy than the ultimate responsibility of government to parliament, through the people.

Senator STOKER: What is interesting about that, though, is that the role of the Ombudsman, in bringing to light problems that might arise with government service delivery through a private actor, means that there is transparency brought to an issue and that there is political accountability brought by a minister having to answer for the publicly exposed problem that has emerged, and they can expect that to be a part of what they are called to answer to at the next election. Australia's constitutional arrangements never contemplated a circumstance where there was a compulsion, I suppose, in that accountability in between elections. The Ombudsman doesn't change that; I guess the Ombudsman helps to expose matters between elections so that there may be better ministerial and government accountability the next time the people have the opportunity to have their say. In your view, is the Ombudsman working in a manner that is consistent with notions of that kind of responsibility or is there a deficit that needs to be felt?

Dr Rundle : I'm not sure I understand the point you made about compulsion in between—

Senator STOKER: In relation to the High Court.

Dr Rundle : Okay, sure. For present purposes, I'm not addressing matters to do with the High Court. The one matter that might be worth discussing is the live question of whether certain contracts require legislative authorisation. It's an unsettled question, but it's a live question that may be prompted in relation to some of the issues before you.

On the point you're making about the Ombudsman's role, my concern with that point is that the Ombudsman has an important role to play in reporting to parliament about problems of maladministration and problems with government, but the Ombudsman is not the parliament. The Ombudsman is not the key representative institution through which citizens have their say about the nature of government and its laws. The Ombudsman also has its own limitations with respect to the nature of the matters that come to it. The process might be triggered by a complaint mechanism or it might be an own-motion investigation. I know that last year, for example, with Human Services, having seen the Commonwealth Ombudsman's submission, there was somewhere in the order of more than 18,000 complaints received by the Ombudsman. Obviously, not all of those can be investigated. There has to be choices made as to which kinds of issues receive the attention of that kind of institution.

There are a lot of mediating factors that are going to bear upon the efficacy of the Ombudsman to pick up and bring to the parliament's attention some of the questions that you're concerned with. I do not wish to downplay the role; in fact, it's a question I'm deeply interested in for my own research purposes—the role of these institutions within the current landscape of government administration. They have their own operational, financial, institutional and other limitations as to what they can bring to bear on this process, and it ultimately must remain secondary to the core institution of ministerial accountability for this kind of provision.

Senator STOKER: I accept that the Ombudsman has got the limitations that parliament established for it in its legislative framework. I look to the example of robo-debt. I see that the Ombudsman's first report provided some firm recommendations, and that they did generate ministerial accountability. The minister was required to answer on it. It provided opportunities for opposition members, including Senator Green, to pursue this issue and it gave them the tools, the information, they needed to be able to do that. Then the Ombudsman's latest report acknowledges that many of those issues have been addressed, that there have been significant improvements in the processes and that there has been concerted effort, and indeed effectiveness, in supporting vulnerable customers.

I understand that the arrangements we have in place at the moment have evolved, including the addition of the Ombudsman and the addition of contracting processes from time to time, though I suspect they are often overstated by people who don't like them. But even though the structures we use in service delivery have changed somewhat, to what they might have looked like in 1901, it strikes me that there is, at least in this example, a process that is working substantially to expose problems, that allows opposition members the tools they need to hold people accountable and that gives government the tools they need to ensure any issues are addressed. It's just very interesting. If you'd like to respond to that, you're most welcome.

Dr Rundle : I would reiterate the point that I urge this parliament to support these important public institutions, that play these roles, to the maximum. They play incredibly important roles, and it could be that they play increasingly important roles given the complexities of government service delivery. It's simply that these avenues to ministerial responsibility via the Ombudsman and how issues are clarified that way need to exist alongside other avenues that ought to remain available to Australian citizens without having to pass through those processes. Both are essential. I will leave my comments there.

Senator STOKER: Mr Ward, I don't have a lot for you other than this question. In your 2018 report you referred to three multinationals—Outsourcing Inc, Serco Group and Stellar Group—as example of companies that are awarded government contracts that need greater transparency and accountability. Have you conducted research on other government contractors or have you cherrypicked these ones for a particular reason?

Mr Ward : I have done a number of reports on the aged-care sector and large for-profit companies that have been getting aged-care contracts. Those reports led to a separate Senate inquiry into the financial practices of aged-care companies, and now we have the ongoing royal commission, which, I understand, is looking at the financial issues going into next year.

Senator STOKER: So aged-care companies are the other ones you have looked at?

Mr Ward : Yes. To respond to your previous comment about these particular companies—and I have taken the questions on notice—what I'm saying is I haven't done a detailed analysis and written a report on them, but I have taken a cursory look and found lots of significant media coverage in places like The Financial Times about their track record on tax payments. I will do a deeper dive, but a cursory Google search immediately turns up quite a bit of evidence there.

Senator STOKER: There's a requirement in place—I'm sure you're familiar with it; it's mentioned in your submission—for entities who want to get a federal contract that has a value of over $4 million to produce a statement of tax record from the ATO. That requires that they have lodged at least 90 per cent of their income tax filings and that they not have debts greater than $10,000. Subject to, I suppose, due process for them, do you regard that as having a positive impact on ensuring that the people whom the Australian government contracts are people who are playing by the rules that other Australians play by?

Mr Ward : I think that the principle and the intent of that legislation and that regulation is fantastic, and I support it 100 per cent. The problem is that it doesn't have teeth. It's very unenforceable. To get a statement from the ATO is not a heavy bar. I think I mentioned in my previous testimony that it's pretty easy for a large multinational to set up multiple companies, and one of those subsidiaries can have a clean bill of health, and we're not looking at the other one. So we're only taking a very narrow view, and that's not actually capturing the practices of the directors and the entities that are actually controlling the decisions of that particular subsidiary that might be bidding on a contract. So I think that the principle there is a fantastic one, but it needs to be constructed in a way that actually has more meaningful enforcement and takes a broader look at companies.

Senator STOKER: Finally, if I were to accept everything that's being said about the need for transparency of contracts that are made with the government, I think there's absolutely some force to that. No-one's spoken about the tender process. Tender processes, in most places, are dealt with on a confidential basis so that there can be fair competition between tenderers. Do any of you have something to say about the appropriateness of a degree of confidentiality in tender processes, as opposed to in contract processes?

Dr Rundle : I won't comment on that, out of concern about expertise on that particular issue.

Senator STOKER: That's okay.

Dr Rundle : It's apart from what I'm here to do today.

Mr Ward : I think that with a tender process, if you're competing for a contract with a company, obviously there are commercial-in-confidence issues. But, once a contract is issued, I think that there should be much more transparency around the terms of that contract so that the government can judge and so we know what the terms are, what is intended to be delivered and what are the mechanisms to understand that that service is actually being delivered in the terms of the contract that was issued, and for the public to have a greater sense of what is expected from that contractor out of that contract. At this point, access to large contracts is just not publicly available.

Senator STOKER: Dr McLeod looks like he has something to say.

Dr McLeod : Senator Stoker and I used to be associates together—full disclosure. I have one point on the contracting provisions. We made some points about commercial-in-confidence provisions in Grand alibis, which we can forward. We also, in our submission to the Joint Committee of Public Accounts and Audit last year, spoke quite a bit about the tendering process and reflected on what the Australian National Audit Office had said was disproportionate understating of contract value. We think that the role of the Auditor-General or the Ombudsman to review commercial-in-confidence provisions is important to lifting transparency in some of these outsourcing arrangements.

May I make a broader point, though: my team have been investigating recently how cycles of disadvantage have been accelerated by service failure and fragmentation, which is one consequence of a greater number of services being delivered externally. What we have seen from many of those investigations is what was in the report: repeated assessments requiring people to tell their story over and over again, and people whose value is defined by the amount of funding that they bring with them. We've said that this is what happens when government can't be or see beyond a contract gate. We've got a sight of the system as a whole, and what seems to have been lost in the tendering process and the contracting process is what can be achieved in the Public Service: integrated service delivery that is coherent without incentivising competition, not collaboration, between providers. I'm happy to send further information on that if it's of interest.

Senator STOKER: It is interesting and, if you wouldn't mind giving a little bit more on that, I would be grateful. Thank you.

CHAIR: I have one question I'd like Dr McLeod and perhaps Dr Rundle to take on notice, if you're willing. You both indicated in your contributions that your approach is more of a general one in terms of the approaches of government. I'm wondering if you or your teams would be prepared to give us an assessment on the specifics that relate to the visa processing arrangements. I'd specifically like to know whether or not you think the government has made foolproof efforts in its current proposal to ensure that the minister and the department retain responsibility and accountability for all visa decisions.

Dr Rundle : Senator, I will take that on notice. I will have to assess whether we have the capacity at the coalface at the moment to answer that particularly question. I will certainly get back to the secretariat.

CHAIR: That would be good. Dr McLeod, can you provide us with any advice on the question?

Dr McLeod : I'll do the same, Senator.

CHAIR: Thank you. I thank all three of you for appearing today.